Senate Investigators Checked 846 Sanctioned Iran Wallets. 84% of Them Ran on Tether

Senate investigators pulled every crypto wallet the US and Israel have sanctioned or blocked for ties to Iran. There were 846 of them.

84% transacted exclusively or almost exclusively in one token: Tether’s USDT.

That is the headline number in a 28-page report released Monday by Democrats on the Senate Permanent Subcommittee on Investigations, led by ranking member Sen. Richard Blumenthal of Connecticut. The Wall Street Journal first reported the document. Its conclusion is blunt: USDT is “Iran’s primary crypto payment rail,” and Tether has “repeatedly failed” to shut it off.

Blumenthal’s statement: “My new PSI report exposes how Tether and its flagship token have become central to Iran’s shadow banking system, allowing the Iranian government to fund its regional proxies, commit human rights abuses, and pursue hostile drone and missile programs as they defy our sanctions regime.”

The report asks the Treasury Department and the Justice Department to investigate Tether. Blumenthal has requested responses by October 9.

The Numbers

Here is what investigators say they found, based on blockchain records, sanctions designations, asset seizure notices and industry reporting:

• 846 sanctioned or blocked Iran-linked wallets analyzed, drawn from US and Israeli lists
• 84% of them transacted exclusively or nearly exclusively in USDT
• 757 of those wallets were on Israel’s list and implicated in terrorism financing. 87% of them used USDT predominantly
• 101 wallets were on OFAC’s list. 57% of them used USDT predominantly
• Circle’s USDC showed up in an “extremely limited” way, per the report

The report ties USDT flows to the Islamic Republic and to its proxies Hezbollah, Hamas and the Houthis. It says the token links Iranian oil proceeds to settlements for those groups, and that some wallets are connected to the Central Bank of Iran.

The reason, according to investigators, is not ideology. It is liquidity. Iranian exchanges adopted USDT because nothing else had the depth.

The Nine-Month Gap

The sharpest part of the report is not about how much Iran uses Tether. It is about how long Tether took to act.

• From 2021 to May 2023, Tether froze none of the wallets Israel had designated, according to the report.
• In June 2023, Israel designated 39 wallets. Tether froze 5.
• The other 34 were not frozen until March 2024, about nine months later.
• In that window, per the report, $34.6 million in USDT moved out of wallets that had been designated but not frozen.

Investigators also say Tether ignored wallets that were never formally sanctioned but had obvious red flags. One example: in December 2025, sanctioned Iranian financier Babak Zanjani posted Central Bank of Iran wallet addresses on X. The report says Tether did not act on them on its own initiative.

“Outside of sanctions or seizure notices, Tether has also failed to act on wallets that bear strong indicators of illicit finance, despite ample information about their ties to Iranian entities or terrorist organizations being in the public domain,” the report says.

Tether’s Answer: $550 Million Frozen

Tether hit back the same day. CEO Paolo Ardoino said the company has frozen about $550 million in Iran-linked USDT in 2026, and that it works with US authorities and Israel’s National Bureau for Counter Terror Financing.

“Tether has consistently demonstrated that USDT is not a haven for sanctioned actors, terrorist organizations or criminal networks,” Ardoino said. “Public blockchains provide authorities with a level of visibility into the movement of funds that simply does not exist with cash, and Tether can act when credible information is provided by law enforcement.”

Read that last line carefully, because it is the whole fight. Tether’s position is that it acts when authorities tell it to. The report’s position is that a company with a freeze button, and public evidence in front of it, should not need to be told.

Two other facts make this more awkward than a normal compliance spat:

• Cantor Fitzgerald, which custodies a large share of Tether’s reserves and owns a stake in the company, was run by Howard Lutnick, now Commerce Secretary.
• Tether’s US arm is led by Bo Hines, former executive director of the White House’s crypto council.

This is a minority report. Democrats do not control the subcommittee, and a request to Treasury and the DOJ is not a charge. But it lands one week after Manhattan prosecutors were reported to be investigating Binance over Iran sanctions, and a week after Binance put $100 million into Circle. Iran is now the single biggest compliance story in crypto, and the world’s largest stablecoin is in the middle of it.

Why This Matters for Crypto Jobs

USDT is the most used dollar in crypto. Every exchange, payments company and DeFi front end that touches it inherits this story.

• Proactive freezing is the new bar. The report’s core argument is that waiting for a government notice is not enough. If that view spreads to regulators, every stablecoin issuer and exchange needs analysts who can find sanctioned exposure before OFAC does. Sanctions investigators, onchain analysts and threat-intel people with Iran, Hezbollah or Houthi-network experience are about to be very expensive.
• Chain analytics is the evidence base. An 846-wallet analysis of blockchain records is exactly the work Chainalysis, TRM and Elliptic sell. Both sides of this fight will need people who can trace USDT across Tron and Ethereum and write it up for a Senate staffer or a prosecutor.
• Compliance engineering, not just compliance. Freezes happen in smart contracts and internal tooling. The gap between “designated” and “frozen” is partly an engineering problem: screening pipelines, alerting, list ingestion from multiple governments. Engineers who build that plumbing are hiring targets.
• USDC shops get a sales pitch. The report goes out of its way to say USDC use was “extremely limited.” Expect Circle and USDC-first businesses to lean into that, and to hire policy, BD and partnerships people to do it.
• Policy jobs follow the paper. A report with a response deadline means letters, hearings and lobbying. Tether, Circle and every exchange with USDT pairs will want government affairs staff who understand sanctions law.

Stablecoins won the argument about whether crypto has a real use case. This report is what happens when the people using it are the wrong people. Browse crypto and Web3 jobs on Cryptogrind, including compliance, sanctions, onchain investigations and policy roles at the companies that now have to prove they can freeze faster.